But in the case of health plans that restricted their provider networks to one health system, providers in those plans often have agreed to lower rates. Health plans that limit patient choice through such narrow networks are expected to offset the lower rate with more patient volume.
How much more volume will depend on how many Americans sign up for coverage through the exchanges, the heart of the Patient Protection and Affordable Care Act's insurance expansion. That likely won't be clear until December, when consumers face a deadline to buy coverage effective Jan. 1. Consumers got their first chance yesterday to sign up and comparison shop for health insurance sold through the exchanges. The opening day was marked by an unexpectedly large volume of public visits to exchange websites and calls to call centers, but also by delays and erratic access to enrollment websites.
Catholic Health Initiatives, which operates across 16 states, agreed to reduce rates by 5% to 10% in narrow-network health plans on the exchanges, said Juan Serrano, senior vice president of strategy and operations with the Englewood, Colo.-based system. The system entered into four narrow-network plans.
Insurance companies' early bids sought steep discounts without establishing narrow networks, which Serrano described as “doesn't hurt to ask” proposals. The health system refused and negotiated higher rates. “It did not make a lot of sense for us to agree.”
Catholic Health Initiatives officials anticipate that some exchange customers may be people formerly insured through an employer plan paying higher rates rather than previously uninsured people. “We're watching, hoping that the exchanges will in fact see meaningful enrollment,” Serrano said. “And of course, we're curious like everyone about what his first wave of enrollment will look like.”
WellStar Health System, based in Marietta, Ga., entered into talks and found that some insurers were unwilling to budge on demands for deep discounts, said Jim Budzinski, the five-hospital system's executive vice president and chief financial officer. “There wasn't a lot of discussion,” he said. “It was like, take it or leave it.”
WellStar decided to leave it. Budzinski said his system agreed to participate in provider networks for about 40% of the exchange health plans sold in the Atlanta market, which has a lot of insurance participation.
North Shore-LIJ Health System in New York entered the state's insurance exchange with its own health plan after acquiring an insurance license earlier this year. The health system's plan offers a narrow network of its own providers. But it also entered into separate narrow-network contracts with commercial insurers for their exchange plan offerings, said Howard Gold, executive vice president of managed care and business development.
Those agreements included reduced rates, he said, though he declined to say by how much.
North Shore-LIJ contracted with about 70% of exchange health plans in its market. Some insurers sought discounts of 10% to 50% from what employer-sponsored plans pay. The system agreed to discounts based on the possible benefits contracts could offer, including greater volume via the narrow networks. “We have looked at every plan and evaluated it,” he said.